GAO Urges More Collocation, Strategic Partnerships

The USPS office on the left may be suitable for backfill by another federal agency. The one on the right…not so much. (Source: GAO Report)

The U.S. Government Accountability Office (GAO) recently recommended that federal property-owning agencies work together and with other agencies to coordinate their space needs, in order to identify ways in which they can share space (collocate), which in turn could result in more efficient service delivery, cost savings, and a reduction in the amount of space the federal government leases.

The GAO report, titled “Federal Real Property: Strategic Partnerships and Local Coordination Could Help Agencies Better Utilize Space,” focused on the U.S. Postal Service (USPS), for which “declining mail volume and operational changes have freed space in many facilities.” It noted that other federal agencies might be able to make use of excess USPS floor space and retail windows, and that such collocation also could enable agencies to achieve additional synergies, such as shared technology infrastructure.

The USPS Inspector General (IG) reported in February 2012 that the Post Office has about 67 million square feet of unused interior space and more than 12,000 unmanned or underused retail windows. “The GSA leases more than 9,000 properties for federal agencies at an annual cost of about $15 billion,” it noted. “In numerous facility optimization area office audits, we reported that post offices are near many of these properties. Sharing Post Office space with federal entities has the potential to lower overall federal lease costs.”

The USPS IG did not, however, determine how much excess Post Office space is suitable for sharing, and the GAO report cited numerous challenges to collocation, including the size, location, and condition of the available space. Much of the excess USPS space is small (only several hundred to a few thousand square feet), not contiguous, and could be difficult to lease, given its location—for example, in a windowless basement. GSA and Department of Veterans Affairs officials told the GAO that they face similar challenges in leasing some of the space within their buildings to other agencies.

The biggest challenge, however, appears to be a lack of local coordination to help manage the day-to-day, local-level negotiations that collocation would require. While the Federal Real Property Council has established a database describing all executive branch properties (not including USPS property), it was not designed to identify and manage collocation opportunities. Local federal officials, on the other hand, know a lot about the specific properties owned by their respective agencies, and indicated to GAO that, with more structured local coordination, they could share their knowledge to support collocation efforts. GSA officials told GAO that local councils would be an effective method for sharing information.

The GAO report therefore suggests that the Office of Management and Budget (OMB) work with FRCP and USPS to take the lead in creating strategic partnerships between GSA and other property-owning agencies with less experience sharing real property, and to establish a mechanism for local coordination that would help identify specific space-sharing opportunities.

Our View: On its face, this type of co-location could be counted as yet another factor destined to siphon off federal demand for leased space. However, our assessment is that GSA-USPS co-location is a good idea that is unlikely to be implemented in any meaningful way. For years, the two agencies have largely been unable to figure this out. At last check, the USPS was landlord to GSA in about 124 facilities (out of more than 30,000 postal facilities) around the United States. Many of these are postal buildings that contain courthouses. Beyond that, USPS has been unable to accommodate GSA, typically due to the fact that the investment required to provide demised and secure space to GSA specifications often doesn’t create much of a payback for USPS. The two agencies also don’t co-exist well on the real estate level: USPS’ building shell specifications are not as rigorous as GSA’s and the lease form is very different. Perhaps the classic opportunity for the agencies to co-exist was when GSA set out to find hundreds of locations to accommodate short-term U.S. Census offices; yet, GSA ultimately executed very few of these leases in postal properties.